This should occur after the discretionary trust has been established and the trust deed stamped (if stamping is necessary). It provides asset protection in that it can prevent a beneficiary’s creditors from accessing key assets. Julie Azzi is a credit representative (CR No. Even if you do not need to pay duty, the trust deed may need to be lodged with the relevant revenue authority so they can mark that no duty is payable. hbspt.cta._relativeUrls=true;hbspt.cta.load(512115, '095d68ce-99c2-48b0-b39c-675b659c6bb0', {}); Set your business on the right path with this simple guide. Setting up a discretionary trust is a complex process, from drafting the legal documents (such as a trust deed) to meeting your taxation obligations. They don’t all have to be included at the establishment of the trust; they can be added later as needed. Business, The main advantages of a family trust are the way in which the profits are distributed, while still providing for asset protection if you’re using a corporate trustee. Just as discretionary trusts offer ways to accumulate assets for beneficiaries, they also have an element of flexibility over how capital and income are distributed. The first type of trust is a Discretionary Family Trust which is one of the ones used most often by businesses which are not large in Australia. Can you tell us why you found it helpful? What works well for one business may not be the best choice for another business, which is why it’s important to weigh the pros and cons of a discretionary trust structure for your unique situation. As a result, the trust assets may be protected from creditors in circumstances where a beneficiary is sued or made bankrupt. When buying property in a trust, the most common type used is discretionary trusts, known as family trusts. The settlor usually has no further involvement with the trust after the initial settlement. You could also arrange it through a lawyer, accountant or other service provider that offers stamping facilities. The following are several pros of discretionary trusts. Reach out on 1300 544 755 or email us at info@legalvision.com.au, Lachlan is the CEO of LegalVision, an innovative and tech-driven law firm. Discretionary trusts can be attractive options for several reasons, and they suit some businesses and organisations better than they suit others. per month. The trustee is the person / legal entity responsible for administering the trust in accordance with the terms of the trust deed. Using a company also avoids unnecessary administration where changes must be made in respect of the registered owner of each trust asset where there are changes in individual trustees. Consequently, it is not unusual for a party (or parties) to a marriage or relationship to be included within a class of beneficiaries of a Trust that is controlled by their parents. Questions, comments or complaints? A memorable birthday party follows careful planning, invitations and gift shopping. Customisable and ready to use in under 10 minutes. This offers a great deal of flexibility, but might seem too nebulous for some stakeholders. Wealth A discretionary trust is a common business structure in Australia because it offers several important taxation advantages. Note there are different types of trusts. There are very many trusts in Australia, superannuation and unit trusts amongst these. Set out below are the steps required to set up a discretionary trust. In this article, we set out the eight steps involved in setting up a discretionary trust. Subject to the terms of the trust deed, the trust can also borrow money and make investments. The Court “reversed” several complex amendments to the trust, which had removed the husband and wife as trust beneficiaries. This is because independent parties generally want to know exactly who will receive what in order to make wise investment and business decisions. LegalVision can assist you – simply fill out the form on this page. We collect information over the phone, by email and through our website. turnaround times, free legal templates and members-only discounts. The beneficiaries of discretionary trusts are usually immediate and extended family members, other family companies and charities. However, not all businesses are good candidates for discretionary trusts. In this article, we set out the eight steps involved in setting up a discretionary trust. If flexibility is important to you, marketing to you know which structure is right for your business break! 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